Today, Brazil’s Constitution and Justice Committee will begin reviewing a proposed welfare reform bill submitted by the Bolsonaro administration.
The reforms would see spending on social programmes, such as aged pension and family subsidies, decrease to reduce Brazil’s budget deficit of 8% and lower the country’s pension deficit below 3% of GDP.
Social welfare problems have been and will continue to be difficult to roll back. The previous administration of Michel Temer was forced to shelve its plans to increase the retirement age and cut pensions due to major opposition in Congress. Bolsonaro faces a potentially more cooperative legislature, but he will most likely have to negotiate amendments.
The president will face substantial resistance in passing his welfare reforms, with unions and opposition parties opposed to his entire legislative agenda. Bolsonaro’s promise to increase the retirement age and reduce pensions may alienate older voters, which may hurt his support in the long-term. However, investors have made clear that pension reform will be critical to regaining the confidence of financial markets, making it likely that the reviews will pass today’s preliminary assessment.
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Kai looks at security and political turbulence in the emerging market economies and also serves as a publisher with The Daily Brief.